Health Services Union employees who threatened to challenge or blow the whistle on former official Michael Williamson's corrupt conduct have told the royal commission into trade union corruption how they were intimidated, isolated and eventually silenced by threats of legal action.

The intimidation ranged from serious threats of legal action to “petty” behaviour, such as forcing a rival to sit at a desk facing the wall of his office.

Witnesses appearing before the royal commission on Monday claimed Williamson's wife was secretly included on the union payroll, despite not being an employee.

"I wanted to fight on with this and reality was we couldn't": Mark Hardacre. Photo: Sahlan Hayes

She was said to have been given a weekly payment of $500. The royal commission was told Williamson explained away the payment, saying it was not for his wife but a tax avoidance measure on his part.

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Mark Hardacre, a former executive member of the NSW branch of the Health Services Union, known at the time as the Health and Research Employees Association, alleged Williamson had isolated him and had “targeted and harassed a number of female staff”.

Williamson, who ran the HSU as his personal fiefdom from 1995 to 2011, has been jailed for a minimum of five years for defrauding the union of close to $1 million and enlisting family and friends to cover up his crimes.

Mr Hardacre, who ran against Williamson in the 1995 union elections, said Williamson's campaign materials included a quote from Machiavelli's The Prince, which said: “It has to be noted that men must either be pampered or crushed, because they can get revenge for small injuries but not for grievous ones. So any injury a man does to an enemy must be of such a kind that there can be no fear of revenge.”

Mr Hardacre said he and his former colleague Katrina Vernon, who suffered a breakdown as a result of victimisation by Williamson, were eventually forced to resign from the union.

Ms Vernon was successful in making a workers' compensation claim. She accepted a generous redundancy settlement which included a confidentiality agreement.

Mr Hardacre said he could not afford to continue fighting a legal battle with Williamson and “reluctantly” signed a confidentiality agreement as part of a settlement, to avoid losing his house.

“I wanted to fight on with this and the reality was we couldn't … the expense of it all and we'd lose our house,” he said.

During his time with the union, Mr Hardacre said he was denied the entitlements of his office including a mobile phone, car and office. He said his position was demeaned and he was forced to take a desk facing the wall of Williamson's office.

Mr Hardacre has also provided the royal commission with evidence that his criticism of the Carr government's neglect of hospitals was censored by Williamson, who was affiliated to the right wing of the NSW Labor Party.

Another former official from the HSU's Victorian branch, Marco Bolano, said Williamson had “fabricated financial irregularities to get rid of an official or employee who did not submit to this will”.

“Mr Williamson and Mr Gerard Hayes had bragged to me about this practice a couple of months earlier over drinks," Mr Bolano said. "I found what they had told me to be disturbing and indicative of what was done to anybody who challenged Mr Williamson.”

Mr Bolano said Williamson received a standing ovation at an HSU annual convention in November 2011 when he walked in to the theme from the film Rocky.

It was at this conference that he and his colleague Kathy Jackson were disparaged and shouted down with “loud booing and jeering” from the NSW contingent. Ms Jackson said she was called a “Judas” and spat at.

Mr Bolano - who says he suffers from post-traumatic stress disorder as a result of his treatment while working for the union - said he received a $5000 donation from the now Opposition Leader Bill Shorten towards his HSU election campaign in 2009.

His campaign manager, Stephen Donnelly, then a staffer to Victorian senator David Feeney, had speculated that Mr Shorten, who was supporting another candidate, wanted to have a “bet both ways”.

A spokesman for Mr Shorten, who was an MP in the Rudd government in 2009, said on Monday that the "claim is completely untrue".

Mr Donnelly also told him that tobacco company Philip Morris had also made a donation to Mr Bolano's election campaign.

He said Ms Jackson had told him Mr Feeney had taken her to a lunch with people from Philip Morris.

Mr Bolano said he could think of “no logical reason” why the tobacco company would fund his election campaign.

The Australian Workers Union had also made a $30,000 donation.

The royal commission's counsel assisting, Jeremy Stoljar, said Katrina Hart, another former HSU official, said she was immediately threatened with defamation action after raising concerns about Williamson's conduct.

Mr Stoljar said senior officials of the HSU commonly tried to intimidate, isolate and harass whistleblowers or perceived rivals.

“These tactics succeeded because, in addition to the ringleader's own conduct, he or she also enlisted the support of many other officials and members,” Mr Stoljar said.

Mr Stoljar said union resources were used to campaign against opponents.

Later this week, Ms Jackson will respond to allegations that she used $1 million in HSU members' funds to pay off two personal credit cards and that she withdrew about $220,000 in cash using HSU bank cheques.

Her involvement with a slush fund operating through a company called Neranto at No 10 will also be explored.